Reports gold prices 2012

Morning Snapshot

by Peter A. Grant

June 15, AM
(from USAGOLD.com) --

15-Jun (USAGOLD) — Gold continues to push to new highs for the week, underpinned by persistent concerns that results from weekend elections in Greece and France will further roil markets. Additionally, another grim round of US data continues to nudge QE3 expectations higher. Major central banks are attempting to reassure markets that they stand ready to act in concert if need be, even as the Bank of England moved proactively in announcing a new liquidity facility which is to commence next week.

The BoE is prepared to inject a minimum of £5 bln a day into the UK banking system beginning on 20-Jun, in exchange for collateral of increasingly dubious quality. Mario Draghi of the ECB said, “The ECB has the crucial role of providing liquidity to sound bank counterparties in return for adequate collateral. This is what we have done throughout the crisis ... and this is what we will continue to do” (emphasis mine). Meanwhile, the BoJ's Masaaki Shirakawa chimed in, "It would be important to supply abundant liquidity to calm worries.”

In testimony before the JEC last week, Fed chairman Bernanke acknowledged the risks posed to the US economy by the crisis in Europe. The FOMC meets next week (Tuesday/Wednesday) as well, and I suspect at a minimum they extend Operation Twist beyond the end of the month, if for no other reason than to appear that they are doing something. Or perhaps more accurately to not appear to be removing accommodations in the face of the recent raft of bleak data.

Are we on the cusp of the next big influx of central bank liquidity that could rekindle the fire under the gold market? We should have a clearer indication come Monday.

• US TIC data net flows -$20.5 bln in Apr, vs upward revised -$48.6 bln in Mar; net long-term security purchases $25.6 bln, v $36.0 bln in Mar.
• Michigan consumer sentiment (prelim) tumbles to 74.1 in Jun, below market expectations of 77.5, vs 79.3 in May.
• US industrial production -0.1% in May, below expectations of +0.1%, vs negative revised +1.0% in Apr.
• Canada manufacturing shipments -0.8% in Apr, on expectations of +0.3%, vs +1.9% in Mar.
• Empire State Index plunges to 2.3 in Jun, well below market expectations of 14.0, vs 17.1 in May.
• Turkey unemployment rate (nsa) falls to 9.9% in Mar, vs 10.4% in Feb.
• UK trade balance (visible) widens to -£10.1 bln in Apr, vs -£8.6 bln in Mar.
• Eurozone trade balance (sa) €6.2 bln in Apr, vs downward revised €3.7 bln in Mar.
• Singapore retail sales (nominal) 2.2% y/y in Apr, vs 9.1% y/y Mar.
• BoJ leaves O/N call rate unchanged at 0.0-0.1%, no change to the asset purchase target, in-line with expectations.

Peter Grant is USAGOLD's resident economist and a well-known analyst globally in the forex and precious metals markets.